Self-employment, duped into making claim for Universal Credit

Client is self-employed plasterer and has been in work for a number of years. He earns on average £82 per week, and was in receipt of Working Tax Credits, Housing Benefit and Council tax support.  This gave him a total income of £182.73 per week.

In February 2019, he met someone who said he could help him access a government loan. In fact this was a claim for Universal Credit.  The person who helped him make the claim asked for an advance.  £1500 was paid into his bank account.  He immediately withdrew two amounts of £250 to pay the person who helped him.  This left him with £1000 in his bank account.

Housing Benefit and Tax Credit Office were sent stop notices and his claims for these benefits were closed.

As he did not know he had made a claim for Universal Credit he did not attend the Jobcentre Plus for an interview. His UC claim was (closed)?  (never opened?)

For several months, client insisted he had not made a claim for Universal Credit.  He eventually telephoned Tax Credit Office with the information that he had been the victim of fraud. This has been inconclusive – but the DWP takes the line that he made a claim which was paid into his bank account and that, rather than being the victim of fraud, he made a (possibly fraudulent) claim himself and owes them £1500 now.

He has therefore lost, and continues to lose, £90 per week in Housing Benefit and Working Tax Credits. (He can continue to claim Council tax support).

In August, the client decided his only option was to make a new claim for Universal Credit. He has made this claim.
His claim for Universal Credit has been refused on the basis that he is assumed to be earning Minimum Income Floor which is too high for any UC to be paid.

He is now living on his earnings alone – this may not be sustainable and could lead to his eviction.  His Personal Allowance and Housing Elements would be around £140 per week, so if he is not earning up to £140 per week (which he wasn’t before) he is now below any sustainable amount.

What is the best advice to give this client?
(a) Is there any way in which we could get him back to legacy benefits on the basis that he was duped into making the original claim?
(b) If not, is the best advice to give up self-employment and claim UC?
(c) Is there a danger that he will be considered to have given up his self-employment voluntarily and will he be sanctioned on that basis?
(d) As soon as he claims UC they will start retrieving the £1500 that was paid into his account – is there any way we can get this written off, as a minimum?

I’m at my wits’ end here.

If you can convince them it’s fraud there may be an opportunity to go bac to legacy - https://www.rightsnet.org.uk/forums/viewthread/14469/P90/#69941

Thanks Daphne, having read through the thread I will check in more detail with the client what went on between himself and this “advisor”  but it seems to me that we can argue that he did not make the claim/claim not duly made and therefore he should return to legacy benefits.  So I will start off with a request for an MR for tax credits and an appeal for HB.  If he was found to have been entitled to these benefits all along, then in a sense I think recovering the £1000 which he did actually have the use of is not unreasonable.  But as it stands, he has now lost 7 months of benefits and is still considered to owe £1500.  Ruth

I think that the complicating factor in terms of going back to legacy moving forward will be that he has made that second UC claim voluntarily. So I think it might be a real struggle to argue that it was an invalid claim. Although I’d still pursue the argument re the first claim as per the linked thread as potentially you could get his legacy benefits reinstated up to the date of the second claim. They can set off the advance payment against this amount.

In terms of the queries re. self-employment - CPAG Handbook suggests you should not be sanctioned for stopping self-employment (p.1056 of this years book). I think his options would be to either stop self-employment entirely (in which case, assuming no health problems/care responsibilities etc) it would become a normal job-seeking claim. Or he can carry on with the self employment and argue that he is not ‘gainfully self-employed’. In that situation the MIF would not applied and they would use his ‘true’ earnings but he would be expected to look for work to ‘top up’ his self-employment. His average self-employed income is almost exactly 10hrs a week at the NMW so you’d imagine the DWP would be expecting him to look for 25hrs work??